UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2000
Commission File No. 33-3353C
PARKER & PARSLEY 86-C, LTD.
(Exact name of Registrant as specified in its charter)
Texas 75-2142283
-------------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1400 Williams Square West, 5205 N. O'Connor Blvd., Irving, Texas 75039
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(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, including area code : (972) 444-9001
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes / x / No / /
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PARKER & PARSLEY 86-C, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of June 30, 2000 and
December 31, 1999...................................... 3
Statements of Operations for the three and six
months ended June 30, 2000 and 1999..................... 4
Statement of Partners' Capital for the six months
ended June 30, 2000..................................... 5
Statements of Cash Flows for the six months
ended June 30, 2000 and 1999............................ 6
Notes to Financial Statements............................. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.......................... 10
27.1 Financial Data Schedule
Signatures................................................ 11
2
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PARKER & PARSLEY 86-C, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
BALANCE SHEETS
June 30, December 31,
2000 1999
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 152,638 $ 142,687
Accounts receivable - oil and gas sales 223,765 194,380
----------- -----------
Total current assets 376,403 337,067
----------- -----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 14,593,664 14,582,050
Accumulated depletion (13,040,768) (12,960,862)
----------- -----------
Net oil and gas properties 1,552,896 1,621,188
----------- -----------
$ 1,929,299 $ 1,958,255
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 54,016 $ 39,171
Partners' capital:
Managing general partner 17,445 17,883
Limited partners (19,317 interests) 1,857,838 1,901,201
----------- -----------
1,875,283 1,919,084
----------- -----------
$ 1,929,299 $ 1,958,255
=========== ===========
</TABLE>
The financial information included as of June 30, 2000 been prepared by
the managing general partner without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
3
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PARKER & PARSLEY 86-C, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Oil and gas $ 439,126 $ 244,884 $ 856,273 $ 435,922
Interest 3,246 1,645 5,700 3,075
-------- -------- -------- --------
442,372 246,529 861,973 438,997
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 231,517 162,895 448,472 344,743
General and administrative 13,174 7,347 25,688 13,078
Depletion 36,749 35,027 79,906 125,827
-------- -------- -------- --------
281,440 205,269 554,066 483,648
-------- -------- -------- --------
Net income (loss) $ 160,932 $ 41,260 $ 307,907 $ (44,651)
======== ======== ======== ========
Allocation of net income (loss):
Managing general partner $ 1,609 $ 413 $ 3,079 $ (446)
======== ======== ======== ========
Limited partners $ 159,323 $ 40,847 $ 304,828 $ (44,205)
======== ======== ======== ========
Net income (loss) per limited
partnership interest $ 8.25 $ 2.11 $ 15.78 $ (2.29)
======== ======== ======== ========
</TABLE>
The financial information included herein has been prepared by
the managing general partner without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
4
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PARKER & PARSLEY 86-C, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
<TABLE>
Managing
general Limited
partner partners Total
---------- ---------- ----------
<S> <C> <C> <C>
Balance at January 1, 2000 $ 17,883 $1,901,201 $1,919,084
Distributions (3,517) (348,191) (351,708)
Net income 3,079 304,828 307,907
--------- --------- ---------
Balance at June 30, 2000 $ 17,445 $1,857,838 $1,875,283
========= ========= =========
</TABLE>
The financial information included herein has been prepared by
the managing general partner without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
5
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PARKER & PARSLEY 86-C, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
Six months ended
June 30,
------------------------
2000 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 307,907 $ (44,651)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depletion 79,906 125,827
Changes in assets and liabilities:
Accounts receivable (29,385) (29,987)
Accounts payable 14,845 23,139
--------- ---------
Net cash provided by operating activities 373,273 74,328
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (11,614) (854)
Proceeds from asset dispositions - 737
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Net cash used in investing activities (11,614) (117)
--------- ---------
Cash flows used in financing activities:
Cash distributions to partners (351,708) (62,524)
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Net increase in cash 9,951 11,687
Cash at beginning of period 142,687 126,623
--------- ---------
Cash at end of period $ 152,638 $ 138,310
========= =========
</TABLE>
The financial information included herein has been prepared by
the managing general partner without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
6
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PARKER & PARSLEY 86-C, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley 86-C, Ltd. (the "Partnership") is a limited partnership
organized in 1986 under the laws of the State of Texas.
The Partnership engages in oil and gas development and production in Texas and
is not involved in any industry segment other than oil and gas.
Note 2. Basis of presentation
In the opinion of management, the unaudited financial statements of the
Partnership as of June 30, 2000 and for the three and six months ended June 30,
2000 and 1999 include all adjustments and accruals consisting only of normal
recurring accrual adjustments which are necessary for a fair presentation of the
results for the interim period. These interim results of operations are not
necessarily indicative of results for a full year. Certain reclassifications may
have been made to the June 30, 1999 financial statements to conform to the June
30, 2000 financial statement presentations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted in this Form 10-Q pursuant to the rules and
regulations of the Securities and Exchange Commission. The financial statements
should be read in conjunction with the financial statements and the notes
thereto contained in the Partnership's Report on Form 10-K for the year ended
December 31, 1999, as filed with the Securities and Exchange Commission, a copy
of which is available upon request by writing to Rich Dealy, Vice President and
Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square
West, Irving, Texas 75039-3746.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
Results of Operations
Six months ended June 30, 2000 compared with six months ended June 30, 1999
Revenues:
The Partnership's oil and gas revenues increased 96% to $856,273 for the six
months ended June 30, 2000 as compared to $435,922 for the same period in 1999.
The increase in revenues resulted from higher average prices received, offset by
a decrease in production. For the six months ended June 30, 2000, 21,638 barrels
of oil, 12,002 barrels of natural gas liquids ("NGLs") and 45,739 mcf of gas
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were sold, or 41,263 barrel of oil equivalents ("BOEs"). For the six months
ended June 30, 1999, 19,850 barrels of oil, 13,581 barrels of NGLs and 56,238
mcf of gas were sold, or 42,804 BOEs.
The average price received per barrel of oil increased $14.40, or 109%, from
$13.24 for the six months ended June 30, 1999 to $27.64 for the same period in
2000. The average price received per barrel of NGLs increased $6.79, or 98%,
from $6.93 during the six months ended June 30, 1999 to $13.72 for the same
period in 2000. The average price received per mcf of gas increased 46% from
$1.40 during the six months ended June 30, 1999 to $2.05 for the same period in
2000. The market price for oil and gas has been extremely volatile in the past
decade and management expects a certain amount of volatility to continue in the
foreseeable future. The Partnership may therefore sell its future oil and gas
production at average prices lower or higher than that received during the six
months ended June 30, 2000.
The volatility of commodity prices has had, and continues to have, a significant
impact on the Partnership's revenues and operating cash flow and could result in
additional decreases to the carrying value of the Partnership's oil and gas
properties.
Costs and Expenses:
Total costs and expenses increased to $554,066 for the six months ended June 30,
2000 as compared to $483,648 for the same period in 1999, an increase of
$70,418, or 15%. This increase was due to increases in production costs and
general and administrative expenses ("G&A"), offset by a decline in depletion.
Production costs were $448,472 for the six months ended June 30, 2000 and
$344,743 for the same period in 1999 resulting in a $103,729 increase, or 30%.
This increase was due to additional well maintenance and workover costs incurred
to stimulate well production and higher production taxes due to higher oil and
gas prices.
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A
increased, in aggregate, 96% from $13,078 for the six months ended June 30, 1999
to $25,688 for the same period in 2000 primarily due to a higher allocation of
the managing general partner's G&A being allocated (limited to 3% of oil and gas
revenues) as a result of increased oil and gas revenues.
Depletion was $79,906 for the six months ended June 30, 2000 compared to
$125,827 for the same period in 1999, a decline of $45,921, or 36%. This
decrease was the result of an increase in proved reserves during the period
ended June 30, 2000 due to higher commodity prices and a reduction in the
Partnership's net depletable basis from charges taken in accordance with
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed Of"
("SFAS 121") during the fourth quarter of 1999, offset by an increase in oil
production of 1,788 barrels for the six months ended June 30, 2000 compared to
the same period in 1999.
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Three months ended June 30, 2000 compared with three months ended June 30, 1999
Revenues:
The Partnership's oil and gas revenues increased 79% to $439,126 for the three
months ended June 30, 2000 as compared to $244,884 for the same period in 1999.
The increase in revenues resulted from higher average prices received, offset by
a decrease in production. For the three months ended June 30, 2000, 10,480
barrels of oil, 6,550 barrels of NGLs and 23,989 mcf of gas were sold, or 21,028
BOEs. For the three months ended June 30, 1999, 9,402 barrels of oil, 7,313
barrels of NGLs and 27,119 mcf of gas were sold, or 21,235 BOEs.
The average price received per barrel of oil increased $12.73, or 85%, from
$14.99 for the three months ended June 30, 1999 to $27.72 for the same period in
2000. The average price received per barrel of NGLs increased $5.46, or 66%,
from $8.33 during the three months ended June 30, 1999 to $13.79 for the same
period in 2000. The average price received per mcf of gas increased 53% from
$1.59 during the three months ended June 30, 1999 to $2.43 for the same period
in 2000.
Costs and Expenses:
Total costs and expenses increased to $281,440 for the three months ended June
30, 2000 as compared to $205,269 for the same period in 1999, an increase of
$76,171, or 37%. This increase was due to increases in production costs, G&A and
depletion.
Production costs were $231,517 for the three months ended June 30, 2000 and
$162,895 for the same period in 1999 resulting in a $68,622 increase, or 42%.
This increase was due to additional well maintenance and workover costs incurred
to stimulate well production and higher production taxes due to higher oil and
gas prices.
During this period, G&A increased, in aggregate, 79% from $7,347 for the three
months ended June 30, 1999 to $13,174 for the same period in 2000 primarily due
to a higher allocation of the managing general partner's G&A being allocated
(limited to 3% oil and gas revenues) as a result of increased oil and gas
revenues.
Depletion was $36,749 for the three months ended June 30, 2000 compared to
$35,027 for the same period in 1999, an increase of $1,722, or 5%. This increase
was primarily attributable to an increase in oil production of 1,078 barrels for
the three months ended June 30, 2000 compared to the same period in 1999, offset
by an increase in proved reserves during the period ended June 30, 2000 as a
result of higher commodity prices and a reduction in the Partnership's net
depletable basis from charges taken in accordance with SFAS 121 during the
fourth quarter of 1999.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $298,945 during the six
months ended June 30, 2000 from the same period ended June 30, 1999. This
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increase was due to an increase in oil and gas receipts of $423,578, offset by
increases in operating costs paid of $87,521 and G&A expenses paid of $37,112.
Net Cash Used in Investing Activities
The Partnership's investing activities during the six months ended June 30, 2000
and 1999 were related to expenditures for equipment upgrades on various oil and
gas properties.
Proceeds from asset dispositions of $737 were received during the six months
ended June 30, 1999 from equipment credits received on active properties.
Net Cash Used in Financing Activities
For the six months ended June 30, 2000, cash distributions to the partners were
$351,708, of which $3,517 was distributed to the managing general partner and
$348,191 to the limited partners. For the same period ended June 30, 1999, cash
distributions to the partners were $62,524, of which $625 was distributed to the
managing general partner and $61,899 to the limited partners.
---------------
(1) "Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains forward looking statements that involve
risks and uncertainties. Accordingly, no assurances can be given that the
actual events and results will not be materially different than the
anticipated results described in the forward looking statements.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K - none
10
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PARKER & PARSLEY 86-C, LTD.
(A Texas Limited Partnership)
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PARKER & PARSLEY 86-C, LTD.
By: Pioneer Natural Resources USA, Inc.
Managing General Partner
Dated: August 10, 2000 By: /s/ Rich Dealy
-----------------------------------
Rich Dealy, Vice President and
Chief Accounting Officer
11
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